Thursday, May 18, 2017

Inflation Isn't Cooperating With the Fed

The Federal Reserve can’t catch a break on the inflation numbers, which are simply not helping in its drive to normalize monetary policy.

Monetary policy makers have three possible responses to the weak inflation data. First, they can define down the extent of an acceptable miss on their target. Second, they can dismiss the numbers as transitory and focus instead on full employment. Third, they can rethink their estimates of full employment and the subsequent implications for the path of interest rates...

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Inflation Isn't Cooperating With the Fed

The Federal Reserve can’t catch a break on the inflation numbers, which are simply not helping in its drive to normalize monetary policy.

Monetary policy makers have three possible responses to the weak inflation data. First, they can define down the extent of an acceptable miss on their target. Second, they can dismiss the numbers as transitory and focus instead on full employment. Third, they can rethink their estimates of full employment and the subsequent implications for the path of interest rates...